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Jos. A. Banks in Talks to Acquire Eddie Bauer — Sources

By Dana Mattioli , Dana Cimilluca

Jos. A. Bank Clothiers Inc. is in talks to buy fellow apparel retailer Eddie Bauer, according to people familiar with the matter, a deal that, if consummated, would dramatically shake up a takeover battle Jos. A. Bank has been waging with Men’s Wearhouse Inc.

Details including what price is being discussed couldn’t be learned.

News of the possible deal comes amid a monthslong, rancorous effort by Jos. A. Bank and Men’s Wearhouse, both discount men’s suit retailers, to buy each other. Jos. A. Bank announced its intent to buy larger rival Men’s Wearhouse in October. After that effort was rebuffed, Men’s Wearhouse mounted its own effort to buy Jos. A. Bank, which was in turn rejected.

Jos. A. Bank’s bid for Men’s Wearhouse was backed by private-equity firm Golden Gate Capital, which owns Eddie Bauer. Golden Gate bought Eddie Bauer out of bankruptcy in 2009 for $286 million in cash plus the assumption of hundreds of millions of dollars in liabilities.

That Jos. A. Bank is exploring another deal doesn’t come as a surprise. The company, which turned down Men’s Wearhouse’s $1.5 billion offer in December, has said multiple times that it might pursue other takeover targets. In a securities filing in January, Jos. A. Bank said: “The company has been and is continuing to engage in preliminary negotiations that could result in an extraordinary transaction, including the acquisition of a business or assets from a third party that would be material to the company.”

A person familiar with the matter recently said that Jos. A. Bank has signed nondisclosure agreements related to possible acquisitions of other companies besides Men’s Wearhouse. It isn’t clear whether the company is seriously pursuing any other deal besides Eddie Bauer.

Eminence Capital LLC, which owns big stakes in both Jos. A. Bank and Men’s Wearhouse and wants them to combine, filed a complaint in a Delaware court in January seeking to block Jos. A. Bank from making an acquisition that the hedge fund fears would frustrate Men’s Wearhouse’s effort to buy the company by making it too expensive.

Eddie Bauer, founded in 1920, makes casual clothing, sportswear and outerwear for men and women. The retailer has around 370 stores in the U.S. and Canada.

The development would be the latest unexpected twist in an often dramatic and unusual mating dance between Jos. A. Bank and Men’s Wearhouse. Early in the process, Men’s Wearhouse pursued a possible purchase of dress-shoe maker Allen Edmonds, people familiar with the matter have said. Allen Edmonds ultimately sold to a different suitor, but the strategy at the time was viewed by some in the Jos. A. Bank camp as a defensive tactic.